Are bonds starting to look like stocks? A 1987 warning, not a forecast
bond
A loan to a government or company that pays interest.
yield
The return an investor receives compared with a bond’s price.
Black Monday
The major stock-market crash in 1987.
What happened
On September 24, 2026, MarketWatch reported a warning from Larry McDonald. He is a former Lehman Brothers trader. McDonald said bond yields are starting to offer returns that look more like stock returns. He called that bad news for the stock market. He made the comparison during an episode of The David Lin Report podcast. He said today’s market resembles the months before Black Monday in 1987.MarketWatch report
What the phrase means
A bond is a loan made to a government or company. The buyer receives interest. Yield measures the return compared with the bond’s price. When someone says bonds offer equity-like returns, they do not mean bonds become stocks. They mean the possible return looks competitive with the return people seek from stocks.
Stocks and bonds carry different risks. Stocks represent ownership in a company. Bonds promise scheduled payments, although those payments do not remove every risk. Bond prices can also change when interest rates change. Investors therefore compare the reward and risk of both assets.
Why stocks might care
Investors decide where to place their money. If bonds offer an attractive return, some investors may choose bonds instead of stocks. That could reduce some demand for shares. It could also make investors demand a larger reward before buying risky stocks.
This is the logic behind McDonald’s warning. It is not proof that money has already moved from stocks into bonds. The MarketWatch report did not provide a measure of such a shift.
Why 1987 is part of the story
Black Monday is the name used for the major stock-market crash in 1987. McDonald said the bond-market setup now resembles the summer before that crash. His comparison focuses on a pattern. It does not establish that the same result must happen again.
Markets can share one feature without sharing every cause. The comparison may help investors ask better questions. It cannot provide a date for a crash or show how large a fall would be.
What is confirmed
The confirmed event is McDonald’s public comment on a podcast, followed by MarketWatch’s report. He is offering an interpretation. This is not an official warning from a central bank or a government agency. The report also does not show that a broad stock-market crash has begun.
What remains unknown
We do not know which bond yields would make investors change their choices. We also do not know whether enough investors would move money to affect stock prices. The report cannot establish that today’s market will follow 1987.
What to watch next
Watch bond yields and bond prices together. Watch stock prices and investor flows as well. It also matters whether other analysts see the same pattern. The useful lesson is not to treat one comparison as a prediction. It is to check whether the relationship between bonds and stocks is changing in a lasting way.
Why do bonds looking like stocks worry investors?
📰 Full story: Are bonds starting to look like stocks? A 1987 warning, not a forecast
A Wall Street veteran says bonds may offer returns that compete with stocks. That could change where investors put money.
bond
A way to lend money to a government or company.
yield
The return earned from an investment.
Black Monday
A major stock-market crash in 1987.
💡 The gist
- Bonds may look as attractive as stocks.
- Some money could move from stocks into bonds.
- The 1987 comparison is a warning, not a forecast.
A bond is a way to lend money to a government or company. The buyer receives interest later.
Yield shows the return compared with the price paid. A higher yield can make a bond look more attractive.
Larry McDonald is a former Lehman Brothers trader. He said bond returns are starting to look more like stock returns. He spoke on The David Lin Report podcast.
This does not mean bonds become stocks. Stocks represent part ownership of a company. Bonds are loans. They work differently and carry different risks.
Investors compare both choices. They ask how much return they might receive. They also ask how much money they could lose. If bonds offer a strong return, some investors may buy fewer stocks.
That could reduce demand for shares. It could also make stock investors ask for more reward. This is the idea behind McDonald’s warning.
McDonald compared today’s bond market with the summer before Black Monday. Black Monday was the major stock-market crash in 1987.
A comparison does not prove that the same crash will happen again. It only says that one part of the market looks similar.
The confirmed fact is that McDonald made this public warning. We do not know whether large amounts of money have moved from stocks into bonds. We also do not know whether stocks will fall.
Next, investors will watch bond yields, bond prices, stock prices, and money flows. They will also watch whether other experts see the same pattern. One person’s warning should not be treated as a certain prediction.
Why can bonds looking like stocks feel scary?
📰 Full story: Are bonds starting to look like stocks? A 1987 warning, not a forecast
People who lend money may see bonds as a good choice instead of stocks.
bond
A promise about money someone borrowed.
stock
A tiny piece of a company.
Black Monday
A day when stock prices fell greatly.
A simple story
A bond is a promise about borrowed money.
A company or government borrows the money.
The buyer gets extra money later.
A stock is a tiny piece of a company.
People choose between these two things.
They want a good reward for their money.
Larry McDonald watches markets closely.
He says bonds may now look as rewarding as stocks.
Some people might buy fewer stocks.
That could make stock prices weaker.
He remembered Black Monday in 1987.
But this is only a warning.
It does not mean a crash must happen.
People still need to watch what happens next.